By Dave Glazier, Consultant at Freethinking
2018 might just be the most vibrant year for financial services in SA. We’re seeing new banks opening their doors (both full-license and mutual-license), a lively local FinTech scene, wild hysteria over distributed ledger technology and crypto-currencies, and the continued threat from the likes of Apple, Facebook and Google.
So just what can we expect to see in the local financial services industry this year?
The launch of Bank Zero later in 2018 (founded by two former execs of the traditional banking landscape) will bring the world of FinTech directly into mainstream consumer spotlight. Other than plastic bank cards, a customer’s single point of interaction with Zero Bank – every transaction, every message – will be “in-app”.
By consolidating around one channel, neo-banks like Zero will be able to focus on creating the very best mobile-first experience. No more fractured experiences across different banking channels, or silos of customer data across different departments. Just one single customer view and one single customer channel.
Lifestyle concierge services
With the basics of ‘save, borrow, transact and insure’ so much easier to deliver via digital channels, these essential services will simply become hygiene factors. Financial institutions will look to step ahead of the pack by providing the useful auxiliary services to individuals, families and businesses.
It’s starting with things like renewing your vehicle license or applying for ID smart-cards – and will evolve into more sophisticated services like arranging flight bookings, scheduling health check-ups, pre-populating tax return forms, and more. Our money habits say a lot about our lives, and banks are in a unique position to make sense of our transactional data and offer services that simplify our lifestyles and even preempt certain needs.
“No more fractured experiences across different banking channels, or silos of customer data across different departments. Just one single customer view and one single customer channel.”
Banking gets social
Personal fitness used to be a lonely and fairly ‘personal’ endeavour (as the name suggests)… but in recent years, apps like Strava have allowed us to share our fitness achievements with others, set goals and spur people on. Staying fit and healthy, it turns out, is more of a group activity (even if the group isn’t physically present to cheer you on!).
In a similar way, becoming more financially fit will be aided by new social tools that help people to benchmark their financial lives against a broader group. Do we pay too much for monthly insurance? Do we have the cellphone contract most suited to our needs? Do we invest in the most tax-efficient manner? Through the wisdom of the tribe, we’ll start getting better answers.
With millions of existing customers, banks are in a great position to host ‘Amazon-esque’ peer reviews, Investment clubs, secure chat rooms, curated advice from different financial experts, and present anonymised data on people in a similar bracket or demographic to us.
APIs change the face of distribution, acquisition, and joint-ventures
Outside of insurance and secured lending, banks have traditionally shied away from forming extensive partnerships within broader ecosystems, preferring to directly own the customer relationship and focus on building their brands.
The nature of the digital economy will demand that banks form closer partnerships with established firms in adjacent industries (like mobile carriers and retailers), as well as with nascent FinTech companies that have the agility to rapidly develop new consumer innovations.
In 2018, the launch of new players like Root will spur lots of new consumer offerings, where the core transactional and underwriting services are provided, via APIs, by established financial services companies. For the traditional players, this opens up new distribution mechanisms and allows them to generate revenue from transaction processing.
2018 is certainly set to be a watershed year for the industry. Buckle up and enjoy the ride…